Tens of thousands of Cambodian migrant workers who have fled Thailand since border tensions began were already facing an uncertain future. Now, as they re-enter a precarious job market braced for US tariffs, they are struggling to find work.

A 36% export tax imposed on Cambodia by US President Donald Trump is due to come into effect on 1 August. Trade talks between the US and Cambodia resumed after a ceasefire was agreed with Thailand after five days of border fighting, but on the eve of the deadline for setting rates no new deal had been agreed.

The tariff is likely to put hundreds of thousands of jobs at risk, particularly in Cambodia’s garment, footwear and travel goods (GFT) sector – an industry that employs a million people, mostly women, according to the UN, and underpins the country’s formal economy.

Q&AWhat is a tariff?Show

Tariffs are border taxes charged on the import of goods from foreign countries. Importers pay them upon entry to the customs agency of the country or bloc that levies them.

The taxes are typically charged as a percentage of a product’s value. For example, a tariff of 10% on a £100 product would carry a £10 charge at the point it is brought into the country.

As well as finished goods, tariffs are levied on components and raw materials, pushing up the costs to manufacturers significantly; particularly in a world of complex supply chains where borders are crossed many times. According to the Center for Strategic and International Studies, parts such as engines, transmissions, and other car components can cross the US-Canada and US-Mexico borders up to seven or eight times.

Serving as a barrier to trade, tariffs raise the price of an imported product for businesses and consumers.

They provide an incentive to buy a domestic tariff-free equivalent, where possible. Countries can also use non-tariff barriers to trade, including import quotas, licences and permits, regulations, safety standards and border checks.

The introduction of tariffs by one country can often collapse into a cycle of retaliation, or even a full-blown trade war. They are often used alongside other policy tools as a means of negotiation between nations, influencing far more than just economic outcomes.

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“We are talking about a substantial loss,” says Massimiliano Tropeano, a garment sector consultant and member of EuroCham Cambodia. “Factories supplying American brands will be substantially affected, with very little room to absorb the 36% added costs.”

He believes that up to 150,000 GFT jobs could be lost.

Garment workers at a factory in Phnom Penh, Cambodia, December 2021. The new tariff puts hundreds of thousands of jobs at risk. Photograph: Xinhua/Alamy

Cambodia’s dependence on the US market is deep. The US is the largest single-country buyer of GFT goods – in 2024, it accounted for more than $5.2bn (£39bn), or 38.5% of Cambodia’s GFT total export revenue. Cambodia exported $12.7bn in goods to the US, while importing just under $322m – a trade surplus that put it in the crosshairs of Trump’s revived tariff campaign. GFT goods made up more than half of those exports.

Mu Sochua, an exiled Cambodian opposition politician and rights activist, says: “About 360,000 manufacturing workers [across all sectors] in Cambodia are directly dependent on US demand, many of whom risk losing their jobs if the tariffs remain in place.” She adds that with women making up more than 75% of the garment sector’s workforce, they will bear the brunt – with knock-on effects for entire households.

Industry observers warn the pressure will be felt most acutely by factory workers already stretched by long hours, minimal protections and stagnant pay.

Hul Voeung at the couple’s one-room home on the outskirts of Phnom Penh. Photograph: Vutha Srey

Hul Voeung and Touch Samnang, a middle-aged Khmer couple who migrated to Thailand before the pandemic in search of better pay, recently returned to Cambodia after struggling to find jobs last year.

Living in a cramped one-room home on the edge of the capital, Phnom Penh, the couple are struggling to stay afloat, sending most of their earnings to their children, who live with grandparents in their home province.

Voeung now runs a noodle stand, while Samnang has picked up work at a small garment factory. But at over 40, she is not formally registered – a tactic used in some subcontractor factories to avoid paying worker benefits – and makes the minimum wage of $208 a month working 14-hour shifts.

“Once the US tariffs are enacted, it’s going to be very difficult for us at the factory, because there may be no more work,” she says. “I’ve already seen the bigger factories cutting back, closing at 4pm, with no overtime.”

Female workers outside a factory in Phnom Penh. Women make up more than 75% of the country’s garment sector workforce. Photograph: Friedrich Stark/Alamy

Nearby competitors such as Vietnam and Indonesia have struck deals for 20% and 19% tariffs respectively, offering potential reshoring opportunities for manufacturers. Their extra advantage, according to Tropeano, lies in homegrown mills that reduce reliance on Chinese fabrics – something Cambodia lacks. US officials have accused Chinese companies – reported to own as much as 90% of Cambodia’s garment factories – of using the country as a trans-shipment hub to sidestep existing tariffs.

Tropeano believes there is a strong possibility the 36% tariff will stick, due to Cambodia’s heavy reliance on Chinese suppliers. The result, he estimates, could be a 20% drop in exports by next year.

A report by Better Factories Cambodia in June found that nearly half of 203 GFT goods factories surveyed were facing order uncertainty beyond the next three months due to the looming tariffs. Fifteen per cent reported no confirmed orders, and almost half were unsure of their operational capacity.

On the factory floor, the pressure is palpable.

At Trax Apparel in Phnom Penh, which exports 20% of its clothes to the US, Yorn Yeut, a union leader, says workers are anxious and echoes Samnang’s point that small or subcontracted factories with fewer benefits keep hiring due to fewer overheads, while many larger ones have already cut hours.

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Women work on the production line at a footwear factory in Kampong Speu, Cambodia. Photograph: Ann Wang/Reuters

The economic instability is rippling far beyond the capital.

Even before the latest clashes, migrant workers had begun pouring back across the Thai border. About 50,000 Cambodians are reported to have returned after the first border clash in May, which set off two months of simmering tensions.

But the exodus accelerated after shots rang out again on 24 July, with thousands more seen flooding into border provinces where there was no fighting.

Twenty-five-year-old That Sopring, says he returned from Thailand after the latest bombing, without aid from either government. “No one forced me, but I came back with fear,” he says. “There’s no work now, just debt.”

A construction worker for nearly a decade, Sopring took out loans to return and to survive at home. “Even when I worked, I earned 370 baht (£8.50) a day, but spent more than half just to live. Now I have nothing coming in.”

Soy Rachana, 27, faces similar uncertainty. After 10 years as a domestic worker in Thailand, she came home to the border Banteay Meanchey province also unsupported and unemployed. “I returned after hearing about the border fighting and worrying for my child,” she says. “I’ve been back two months, but there is no work in the countryside.”

Cambodian migrant workers wait to cross the Ban Laem checkpoint on 29 July, after deadly clashes along the border. Photograph: Lauren DeCicca/Getty Images

It is estimated more than half of Cambodian households are in debt to formal lenders, making it one of the most credit-penetrated countries in the region.

The Cambodian prime minister, Hun Manet, has urged banks and microfinance institutions to ease loan repayments for returning migrants. His appeal highlights the wider problem of predatory lending in the country, which often traps vulnerable workers in cycles of debt.

“Cambodia’s labour market presents a paradox,” says Tola Mouen, executive director of the Center for Alliance of Labor and Human Rights. While official figures suggest near-full employment, they mask realities. More than 14% of workers earn less than $2.15 a day and 53% are working in insecure jobs.

“Given those figures – and the scale of household debt – I don’t see how Cambodia could absorb all the returning migrant workers, or even half of the 1.2 million in Thailand,” Mouen says. “With so few options at home and no protections, workers are more likely to return to Thailand, even with tensions running high, than to stay and face poverty here.”

For now, Cambodia must try to hold the ceasefire at the border and strike a last-minute trade deal or face the impact of US tariffs. Much now hinges on the whims of US trade policy – but with Trump insisting the 1 August deadline will not be extended, hopes that a war-scarred region might be granted reprieve are slim.

Additional reporting by Vutha Srey